National carrier Air India is in advanced talks for leasing three of its Boeing 777-200LR aircraft to Etihad Airways as it looks to save on interest and principal repayment as well as maintenance costs.
“We have got an offer from Etihad to lease them these aircraft for seven years,” a senior Air India official told FE.
“We are still evaluating the offer and are in discussions with them (Etihad). A decision will soon be taken in this regard,” the official added without elaborating on the size of the deal.
Air India had in December 2013 sold to Etihad five Boeing 777-200LR aircraft, which have an average age of six years, for Rs 2,135 crore, or about Rs 427 crore per plane.
The funds realised from the sale of the five planes were used to extinguish loans taken against them, enabling the airline to save $100 million per year. However, the airline came under intense scrutiny from all quarters for selling the aircraft at a throwaway price, each of which cost it Rs 1,300 crore in 2005.
“This time around, we will be leasing the planes for seven years and not selling them,” the senior official mentioned above said.
Another senior Air India official told FE that the airline struggled to break even on routes where B777s were deployed, mainly due to its high operating costs, the main reason for putting these planes on the block.